Money and socially necessary labor time: A (Pre-)Review of Moseley’s new book

You are not supposed to review a book without having read it. This often poses a problem for me, since I never buy books, but sometime want to say something about them before I can steal them off the internet.

Such is the case with Fred Moseley’s new book, ‘Money and totality’. Fortunately, in the case of Moseley’s new book, there is a paper trail going back at least to the 1990s on which I can draw to raise questions about his argument. These pre-publication texts (here, here, and here, along with a recent review of the book by Michael Roberts, raise enough questions about Moseley’s so-called ‘macromonetary’ approach to capital that allow me the opportunity to outline a number of troubling problems with methods.

I will detail them in the following post. The reader is forewarned, however, that what I say here may have already been addressed by Moseley in the book.

Whoops! Did Michael Roberts and Fred Moseley just revise Marx?

In this morning’s compare and contrast, we look at two different formulations of the category, socially necessary labor time, in Roberts’ essay, Consistent, realistic, verifiable; his review of a new book on labor theory by Fred Moseley:

Formulation 1: “Marxist value theory is based on the view that commodities are priced in the market according to the labour time expended on them.”

Formulation 2: “The market decides whether certain amounts of labour time expended on producing particular commodities are ‘socially necessary’.”

In labor theory of value, socially necessary labor time, of course, is the labor time required for production of a commodity, its value. However, in Roberts’ summary of the argument made by Fred Moseley SNLT is first described as a quantity of labor existing before exchange. Then it is later described by Roberts as a quantity of labor determined by exchange — by “the market”.

So which is it, Mr. Roberts? Is socially necessary labor time determined by production or exchange? There is no rush on this, Mr. Roberts. I am sure the proletarian revolution can wait patiently while you theoreticians figure this out.

The TSSI school has completely capitulated to the value-form school

In a surprisingly abrupt about face, it looks like the TSSI school has capitulated to the value-form school of Michael Heinrich and company on all the important points of controversy between the two schools.

Of course, the TSSI school is the least ethical of all Marxist schools, because they want to drop Marx while pretending to defend him. The value-form school at least has enough principles to admit they think Marx was wrong, but not the TSSI school. Expect the TSSI school to continue pretending they uphold an orthodox interpretation of Marx’s labor theory of value.

In any case, we now have it in black and white, courtesy of Michael Roberts, who, in his review of Fred Moseley new book, Consistent, realistic, verifiable, argues that Marx labor theory of value basically examines the capitalist mode of production, “[from] the capitalist point of view, [where] money advanced must lead to more money, or forget it.”

I have no words to describe my reaction to this statement.

The state and the final collapse of capitalism

I received a very good question on my ask.fm:

“Can you sketch out a devaluation crisis/scenario that would collapse capitalism?”

I could only partially answer the question, because of the limited space allowed by ask.fm. In my answer, I was only able to set the premises of my particular scenario for capitalist collapse. I want to extend my remarks here to fill in whatever blanks may exist.

Here is the most important premise I will be using in the following scenario, which is, of course, open to question:

The capitalist mode of production is in a permanent and continuous state of overaccumulation of capital. This condition Marx described as capital having reached the point where no new capitalist investment can increase profits. Under these conditions, each increase in capitalist investment of new capital has the paradoxical effect of reducing profits. This gives rise to a mass of capital that cannot be productively employed and a population of workers who cannot find productive employment.

MMT is right … which (paradoxically) is why it is wrong

I’ve been thinking about responding to this article, Internet Marxists Who Are More Austrian than Neoclassical), but I don’t want to repeat myself, so let me try a different tack. I don’t guarantee MMTers will understand my argument. In fact, I don’t think they care about my argument. But, in any case, here goes:

The essential paradox of Modern Money Theory is not that it is wrong, but that it is wrong because, essentially, it is right.

The writer appears to believe that any opposition to MMT policies must result from the belief, “that a state currency not ‘backed’ by gold must surely have zero value or, at the very least, command a level of acceptance likely to crumble at any moment.”

Let me assure the writer that, at least in my argument, this concern is misplaced. I do not oppose MMT policies because fiat currency is subject to depreciation. Nor am I a gold-bug or what he calls an “Austrian Marxist”. In fact, communists were advocating a non-commodity means of exchange while bourgeois neoclassical theory was still in its infancy. Further, the Soviet Union and all socialist experiments of which I am aware, had no commodity money at all.

Thus, to understand why I oppose MMT we have to begin with its core assumptions — assumptions that I think are entirely valid.

Schrödinger’s Capital: Heinrich’s hilarious ‘refutation’ of Marx on the falling rate of profit

NOTE 22: The falling rate of profit and the collapse of production on the basis of exchange value

In part 2 of his 2013 essay, Crisis Theory, the Law of the Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s, Heinrich argues Marx  makes a far-reaching assertion that is impossible to demonstrate empirically: in the long term the rate of profit must fall.  As Heinrich points out the very nature of the law — that it only points to a tendency — implies past historical data cannot simply be projected indefinitely into the future. The rate of profit may well have fallen in the past or it may have risen, but this does not mean a given historical trend will continue in the future.

The argument Heinrich makes in this section appears to challenge a long-standing Marxist assumption that there is at least an indirect link between capitalist crisis and social revolution. For some Marxists — notably, Andrew Kliman and company — the crisis produced by the falling rate of profit is a theoretically necessary assumption, because such a crisis is thought to be the material force that ultimately triggers a working class social revolution. Without the crisis, and the deepening poverty and political discontent it creates, many Marxists have no ready explanation for why the working class would overthrow capital. Thus, if we accept Heinrich’s argument about the falling rate of profit, what are we left with as a trigger for the social revolution?

“Schrödinger’s Capital”: How Michael Heinrich deliberately twisted Marx’s Grundrisse argument

NOTE 21: The collapse of production on the basis of exchange value

In my previous note, I argued the exchange value paid out as currency wages since the collapse of Bretton Woods in 1971 has been zero. My assertion is based on the consensus among scholars within both the value-form and MELT schools. This consensus among Marxist scholars assumes that, since 1971 and the collapse of the Bretton Woods agreement, the money we use to purchase commodities has no value of its own.

However, although both the MELT school and the value-form school generally agree the dollar does not represent any exchange value after 1971, both schools deny this change has any material impact on labor theory analysis.

Both the value-form school’s argument and the MELT school’s argument that nothing changed after 1971 should, in all honesty, require empirical evidence prices behave the same irrespective of the labor content of money. Yet neither school has ever once produced any evidence for this view. Despite the fact neither school has ever shown prices behave the same even if the labor content of the object serving as money is zero, this, it seems, has no effect on the discussion, for the simple reason that, surprisingly, no Marxist has ever demanded empirical proof from either school of their claims. You really have to wonder how Marxists can see one of the fundamental assumptions of their theory simply dismissed out of hand and not demand empirical proof.

Schrödinger’s Capital: Wherein Heinrich explains profit as a price markup over costs

NOTE 20: The fiction of wages

In an excerpt from his book, The Science of Value, Michael Heinrich argues, “the independent existence of exchange value is only expressed adequately as self-valorizing value”.

I have no idea what Heinrich means by this nonsense statement, so let’s see if we can parse it.

In the first place, what is meant by “the independent existence of exchange value”? For exchange to have an independent existence can only mean that money, in the form of some particular commodity, has emerged as the universal equivalent of all other commodities. The problem with this view for the value-form school is that, according to the value-form school, no commodity has value, the latter being only an artifact of the exchange of commodities for money. If no commodity has value, including the commodity serving in the function of money, how can exchange value exist?

According to Arthur in his 2003 essay on the subject, we “posit the presupposition” use values have value by measuring their worth in units of a money. Money, says Arthur, creates the dimension of value and is the measure of value. The value of a commodity is nothing more than its money price.

Schrödinger’s Capital: What is not forbidden by labor theory is compulsory

NOTE 19: The monetary expression of labor time (M.E.L.T.)

If we state the total product of labor produced in a given period of time in terms of the commodity money prices of those commodities, we are, at the same time, stating the aggregate socially necessary labor time of society in so many units of the socially necessary labor time required to produce a unit of the commodity money. If it takes one hour to produce an ounce of the commodity money, the total socially necessary labor time of society is equal to so many units of money.

The problem with MELT theory, however, is that it uses a unit of measure, fiat money, that has no socially necessary labor time. Its employment as a tool to measure the labor time of society is at least problematic.

This is one way to interpret the validity of the MELT function: nothing about fiat currency tells us anything about the socially necessary labor times of the commodities for which it is exchanged, because it does not share the common characteristic of being a product of labor. However, another more interesting and far more fruitful way to interpret the results of the MELT function is that a fiat currency always states the duration of socially necessary labor time as zero.

Schrödinger’s Capital: All labor is necessary so long as someone pays for it?

NOTE 18: Is there a material limit to socially necessary labor time?

The charts I introduced in my last note on the value-form school raises an interesting question. If the charts provide two different measures of value — one drawn from Marx’s labor theory of value, the other drawn from value-form theory — they also provide two different measures of socially necessary labor time. If this is true, which measure of necessary labor time is accurate?

Let me restate Arthur’s argument this way: What we today call value is a mental abstraction that only develops after the emergence of money. Commodities do not have a common attribute called value; rather, our practice of attaching prices to commodities creates the notion they have value. We act on commodities as if they have value and thus “posit the presupposition” they are values.

Since value is a manifestation of the socially necessary labor times required for production of commodities, does money also determined social production times as well?